Decision highlights difficulty of drafting questions in surveys

A war between Tasman Insulation New Zealand Limited and the defendants began in 2010 when the defendants started selling insulation product in New Zealand under the name Earthwool. The Earthwool packaging featured the words 'batt' and 'batts'. BATTS is a registered trademark belonging to Tasman in New Zealand covering insulation products. Tasman sells the market-leading insulation product Pink Batts in New Zealand.

Tasman and the defendants exchanged blows over the defendants’ use of the words 'batt' and 'batts', and in November 2011, the defendants applied to revoke Tasman’s trademark registration on the basis that, in consequence of acts or inactivity of Tasman, the trademark had become a common name in general public use.

Tasman then sued for the use of the term 'batts' as well as various claims made by the defendants about their products, particularly about its claimed environmental friendliness, some of the claims made about the product and in relation to the name Earthwool itself and whether consumers would think that the product was made from sheep’s wool. The defendants counterclaimed in respect of some of the claims Tasman made about the performance of its own Pink Batts product.

The result is a 127-page, 404-paragraph decision from Brown J in the High Court of New Zealand issued in May 2014 (Tasman Insulation New Zealand Limited v Knauf Insulation Limited (CIV-2011-404-8141 [2014] NZHC 960)).

On the issue of whether 'batts' was a generic term for insulation, the judge ruled that it was not. This was despite the defendants producing thousands of listings from the auction website 'trademe.co.nz' demonstrating generic use of 'batt' or 'batts'. The judge determined that, although there was a degree of “loose terminology” in relation to 'batts', as well a “not insignificant amount of what appears to be generic use”, collectively, it was not enough to convince him that the term was generic. 

Tasman also criticised the defendants for not producing a market survey on the issue of genericism, which it said that the defendants had commissioned but chosen not to put in evidence.  Tasman invited the judge to draw a negative inference from the survey, namely that it obviously did not support the defendants’ case or they would have put it in evidence. The judge declined to make any sort of inference from evidence that was not before him. Tasman on the other hand, did produce a survey. Participants were shown five insulation products, with the branding removed, and asked which of the products were 'batts'. The majority selected Tasman’s product. Tasman led expert evidence to say that this demonstrated that New Zealand consumers associated the word 'batts' with Tasman’s product, and not as a generic term. In fact, what the judge concluded from the survey was that it went to brand recognition of the colour pink, rather than to the issue of distinctiveness. So while the survey did not harm Tasman, it was not money well spent. This highlights once again the difficulty with survey evidence, and in particular drafting the questions in such a way as to produce both useful and robust results.

The judge also noted that, although Tasman had made efforts to protect its trademark and prevent generic use of it, its attempts were not “exemplary” as Tasman claimed. 

Overall, the trademark was not found to be generic.

Having found the trademark was not generic, it seemed inevitable that the defendants would be infringing Tasman’s trademark registration BATTS - the word 'batts' was used on packaging, on the instructions that came with the packaging, on the 'earthwool.co.nz' website and on a product data sheet, as well as some advertising. 

In a similar vein to the genericism claim, the defendants unsuccessfully claimed that their use was not use as a trademark, but to indicate a characteristic of the product. 

Tasman also claimed against the defendants in respect of the name Earthwool when the product is not made from wool but from recycled glass known as 'glass wool'. Tasman produced survey evidence demonstrating that a majority of consumers thought the product was made from sheep’s wool. The judge found there was a reasonable possibility that consumers would assume that Earthwool was made from sheep’s wool and the name and brand Earthwool was found to be misleading and deceptive in respect of product not made from sheep’s wool.

The result of the 127-page, 404-paragraph decision was that:

• Tasman’s registration for BATTS was safe, the defendants had infringed that registration, and had no valid defences of descriptive or not trademark use; and
• the brand Earthwool , as well as the manner of marketing the Earthwool product, contravened the Fair Trading Act for engaging in misleading and deceptive conduct. 

The defendants did however succeed in their claim that a comparative test conducted by Tasman between the Pink Batts and Earthwool products where the products were immersed in water was misleading and deceptive.

The decision has been appealed by all parties to the Court of Appeal and is likely to be heard some time this year. 

Kate Duckworth, Catalyst Intellectual Property, Wellington